Stanley M. Bergman
Chairman of the Board and Chief Executive Officer at Henry Schein
Thank you, Graham. Good morning, everyone, and thank you for joining us today. We are today reporting solid results for the second quarter, driven by our North American dental businesses with strong equipment and steady general merchandise sales and with continuing strength in sales of our technology and value-added services, our implants, biomaterials and endodontic products. The underlying fundamentals in the US dental market remains strong and demand for dental services and customer confidence confidence continues to improve, as of course, evidenced by the ongoing investments our customers are making in their practices. In addition, we are seeing growing demand for our implants systems and endodontic products, as well as our integrated software and services solutions, which are generating strong growth by delivering greater efficiency and a better experience to our customers.
In the alternate care market, that's the medical market, elective procedures are close to normal levels, while second quarter visits to primary care physicians were down year-over-year, reflecting last year's higher visits to physician offices and urgent care centers as a result of the extended flu season last year. As expected, sales of PPE and COVID test kits continued to decline. However, we are now seeing sales level -- the sales level up sequentially. We are now seeing sales level up sequentially, and we expect the year-on year impact to be much lower in the second half of 2023. When excluding these product categories, local currency internal sales growth for the Company was 3.3%. In general, our North American dental business performed better than we expected at the start of the year, offset by some incremental COVID-related headwinds facing our medical business as discussed earlier on.
Our outlook reflects overall confidence in our business and in the markets we serve and accordingly, we are affirming our non-GAAP diluted EPS financial guidance for 2023. Our financial results and guidance demonstrates the strength of the business as discussed earlier and continued advancement of our 2022, 2024 BOLD+1 Strategic Plan We are successfully executing key initiatives -- the key initiatives actually in the plan, including expanding our specialty products and value-added services portfolio, optimizing our distribution businesses, leveraging key customer relationships and driving digital transformation.
Year-to-date, we have committed over $1 billion to acquisitions that accelerate the implementation of our strategic plan, adding high-growth, high-margin products and services to our offering. With this clear focus, we believe we are well-positioned to further enhance Henry Schein's leadership in the markets that we serve and to deliver long-term sustainable shareholder value. Among the larger transactions are our strategic partnership with Biotech Dental, which we closed in April; the acquisition of S.I.N. and Implant Systems, which we closed in July; and the recently announced acquisitions of Shield Healthcare and Large Practice Sales, which we expect to close in the third quarter.
With these transactions, we have significantly expanded our implants, bone regeneration and clear line of product portfolio, digital workflow capabilities, presence in distributing products directly to the patient in the healthcare arena and value-added services. Continuing our strategy of following the patients to provide healthcare services where it's being delivered, we expect our recently announced agreement to acquire Shield will create an offering with more than $300 million in annual revenue and distributes medical supplies across the United States directly to patients in their home. On completion of this acquisition, this business will be led by Adam Breese [Phonetic] who joined Henry Schein as Vice President and General Manager, Homecare Medical Products, and has significant experience in this area.
We are excited about the fundamentals of this market, which supports a growing aging demographic experiencing more chronic disease beyond added convenience to the patient, the trend of moving care to the home is expected to provide efficiency in the overall healthcare system. And most important, many of our customers have asked us to provide the service. We've been providing in a moderate way up to now, but now we are committed to advancing our position in this market to support our customers who have requested us to move into the home care arena as a continuum of care.
Our Homecare medical product offering will now include antrostomy, incontinence wound care and diabetes products, and we plan to leverage our physician relationships, as noted earlier on, product, distribution expertise and corporate brand assortment to further grow this area. Also for many years, we have had a successful practice transitions group dedicated to existing smaller and mid-sized dental practices. And are most enthusiastic about the acquisition of Large Practice Sales, a leading transition advisor services business, which expands our capability to advise dental practices on larger practice transitions. Of course, being a service to our DSO customers as well.
We are also advancing the integration of our digital digital workflow software with our practice management software to create a unique digital solution for dental practitioners. In this connection, we have asked Andrea Albertini, CEO of our International Distribution Group to lead the cross-company one Schein Solution and accelerate what we have internally called our three-click integrated software solution for our customers. This simplified open architecture process begins with the capture of any image from an intraoral scanner or 2D, 3D digital imaging unit through our practice management software, followed by the application of embedded artificial intelligence solutions to help in diagnosis, case acceptance, planning and design and ending with direct -- or the direct connection to fabricate the prosthetic through either chairside known, a 3D printer, or the transmission digitally of the file to the dental lab.
Let me now turn to a review of the quarterly highlights from each business units, beginning with the dental distribution. In North America, dental offices were generally busy, and this helped our second quarter dental merchandise growth, of course, excluding sales of PPE products. A driver in equipment sales was a broad equipment was of course our broad equipment which enabled our customers meeting solutions to increase productivity to meet demand, and of course, drive up the efficiency of the practice and of course better clinical care. North American Dental equipment sales were up double-digits. Sales of traditional equipment continued to be strong and we are pleased that sales of digital equipment return to growth this quarter. Internationally, equipment sales were relatively flat to the prior year. The equipment backlog in North America has held steady and our international equipment backlog is returning to pre-pandemic levels.
Now turning to our dental specialties. Sales of dental implants and biomaterials were key drivers in the second quarter, complemented by endodontic and clear aligner businesses. We are seeing implant demand increasing in North America with sales of our BioHorizons Camlog premium implant delivering mid-single-digit growth, a sequential improvement versus the first quarter. Internationally, demand for implant systems remains very good.
Generally, demand for implant continues to favor value-priced products. We believe that our Camlog -- or BioHorizons Camlog product offering is well-positioned, but also the moving of demand for value-priced products is reflected in our double-digit growth achieved by [Indecipherable] provider of dental implants and bone regeneration products.
Looking at recent deals, our transaction with Biotech Dental brings a market-leading portfolio of dental implants and clear aligners to Henry Schein and digital workflow software. S.I.N. on the other hand, that's an implant systems, provides as an entree into the large Brazilian implant market and complements our successful Brazilian general dental consumables and equipment business. Both Biotech and S.I.N. offer high-quality implants at an attractive price, and we have exciting opportunities of expanding this cost-competitive products to other geographies, including the United States, providing, of course, a more comprehensive offering and enabling us to be even more competitive in the implant and bone regeneration space.
This quarter, growth in our endodontic business continues to be driven by our Brush [Phonetic] and Edge brands in both North America and internationally. Our orthodontic business is making steady progress with our line of business, although this is still a relatively small component of our global revenues. We are seeing growing demand for our specialty products from DSOs, and that shouldn't -- specifically from our DSO customers. Recall, we have a pretty. Decent market-share in the DSO market and we see continued adoption of specialty procedures among dental practitioners. We have grown our global implants bone regeneration and related products and services into over $800 million in revenue and our specialty products to approaching $1.2 billion in revenue in aggregate on an an annualized basis. We now offer a broad range of premium and value alternatives to North American and International practitioners. We expect dental specialty growth to accelerate in the second half of the year due to these acquisitions, but also due to year-over-year comparisons easing.
Now let's turn to the technology and value-added services business, where the largest component of course is Henry Schein One. Global growth in Henry Schein One is being driven by ongoing migration to our cloud-based practice management software solutions, Dentrix Ascend and Dentalee [Phonetic] and by growth in our revenue cycle management business resulting from increased patient traffic, driving a higher-volume of e-claims. Dentrix Ascend and Dentalee grew to approximately 7,000 customers and this day represents. approximately 40% year-over-year growth. Customers and prospective customers are particularly enthusiastic about incorporating our artificial intelligence solution into their practice management software product. We believe our embedded solution is certainly best-in class.
We have grown our technology and value-added services businesses into an almost $900 million revenue portfolio on an annualized basis. In addition to Henry Schein's Technology Solutions, we now offer a broad range of value-added services through our businesses such as ESS, which provides revenue cycle management and Uniqus providing advice on PPO agreements with insurance providers along with other services, including financial services, practice transitions, staffing services, education and remote patient monitoring for office space, dental and medical practitioners. We expect the technology and value-added services sales growth will accelerate during the second-half of the year.
Turning now to the medical business. During the second quarter, our medical business achieved low-single digit growth, excluding PPE products and of course COVID-19 test kits. This compares with mid double-digit growth last year. It's really important to understand that when results benefited from some late-season sales at point-of-care flu diagnostic test. This year, excuse me, was a more typical flu season, and as a result we had much lower sales of flu, COVID-19 and multi-assay diagnostic and related products. Sales growth was also affected by the conversion of certain pharmaceuticals and other products, lower price generics and corporate brands, of course, with a higher gross profit margin. This is a trend that is taking place throughout healthcare. Sales of medical equipment were relatively soft in the market. The market took a temporary pause to assess likely future demands. However, we have subsequently seen investment interest return in July.
So in summary, the fundamentals of our core business remains solid, very good, and the team is executing well on our 2022 to 2024 BOLD+1 Strategic Plan.
Would that, I'll turn the call over to Ron to discuss specifics relative to our quarterly financial results and provide full-year guidance. Thank you. Ron, please.
